Mexico Outlook Turns Positive: S&P

Mexico Outlook Turns Positive: S&P

March 13, 2013

S&P has revised the outlook on Mexico’s BBB rating to positive from stable, the agency says, based mainly on the government’s policy enactments. “The prospects for the passage of policies that further strengthen the country's fiscal room for maneuver and medium-term growth have improved under the Pena Nieto administration,” the agency says, noting that the country’s track record of cautious fiscal and monetary policy should sustain macroeconomic stability and contribute to economic resiliency. S&P is of a view that there is a greater than one-in-three chance that the government will pass a series of policies that meaningfully improve Mexico's fiscal options and inject more dynamism into the economy. The administration's ability to capitalize on its recent political momentum during its first 12-18 months will be crucial for an upgrade, while failure to get broad support for initiatives could result in a return to a stable outlook. In the latest policy move, Mexican lawmakers announced legislation this week designed to rein in the country’s telecommunications monopolies, creating an agency with the power to regulate competition in the phone and broadcasting industries. The details remain to be determined, but the bill is said to enjoy support from the country’s three main parties. S&P also changed the outlooks on the ratings of Pemex and 11 banks to positive.

S&P has revised the outlook on Mexico’s BBB rating to positive from stable, the agency says, based mainly on the government’s policy enactments. “The prospects for the passage of policies that further strengthen the country's fiscal room for maneuver and medium-term growth have improved under the Pena Nieto administration,” the agency says, noting that the country’s track record of cautious fiscal and monetary policy should sustain macroeconomic stability and contribute to economic resiliency. S